INVESCO Real Estate Limited (“INVESCO”) and ORCO Property Group (“ORCO”) announce the establishment of the ENDURANCE Real Estate Fund for Central Europe (the “Fund”) in Luxembourg.
The Fund is focusing on a “Core Plus” strategy of acquisition, development, refurbishment and realization of office and retail properties, or portfolios thereof, located in the Czech Republic, Hungary, Poland and Slovakia. The Fund is targeting a net leveraged IRR to investors in excess of 17.5%.
INVESCO and ORCO each own a 50% stake in the ENDURANCE Management Company, a joint-venture incorporated in Luxembourg, which will manage the Fund.
INVESCO will act as Fund Manager, and is responsible for the provision of the investment committee, strategic research, investor relations, reporting and strategic direction, the companies said. It will also assist in the sourcing of suitable investment opportunities given its activities in the region during the last 10 years.
ORCO will be the Asset Manager for the Fund and, where appropriate, will provide Property Management services. ORCO will also be responsible for deal sourcing and for arranging project financing and project management, the companies said.
The Fund Manager and Asset Manager are in an advanced stage of discussions with vendors on a number of potential acquisitions that meet the Fund’s investment objectives.
The Fund, which is structured as a Luxembourg Fonds Commun de Placement (FCP), has a target size of Euro 150 million of equity capital, equivalent to an investment capacity of up to Euro 500 million. Its investors will be institutional investors from Europe, North America, the Middle-East and Asia. Both co-sponsors are also investing in the Fund, they said.
“The European Union accession on May 1 marks the increasing maturity of these Central European markets. We continue to believe that there are excellent opportunities for investment into existing real estate and development situations,” said Jean-Franois Ott, President and CEO of ORCO. “ORCO looks forward to extending its expertise on the refurbishment and development of real estate in the region in order to provide the target returns to investors in the ENDURANCE Fund”. Gerald Parkes, CEO of INVESCO Real Estate, states that “INVESCO is delighted to be in joint venture with the ORCO Group which has an enviable track record in the region. INVESCO believes that the combination of ORCO’s local skills, experience and networking together with the governance, research and investor liaison expertise which are inherent to INVESCO’s style of business offers a unique and formidable partnership in this region. Our research confirms the view that opportunities exist for rental growth and some yield compression over the life of this Fund. This Fund will sit comfortably alongside the core investment mandates that INVESCO has in the region”.
JP Morgan is acting as exclusive financial adviser to the Fund. INVESCO is marketing the Fund in North America. Dexia Fund Services has been appointed as custodian and fund administrator. First European Transfer Agent, a subsidiary of Dexia BIL, will provide transfer agency services.